What bumper US growth means for funds, stocks and cur­ren­cies /

The US re­leases its strong­est quar­terly GDP lev­els for four years

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New fig­ures re­veal the US gross do­mes­tic prod­uct (GDP), ex­panded by 4.1% dur­ing the sec­ond quar­ter. Al­though slightly be­low ex­pec­ta­tions this still rep­re­sented the fastest rate of growth since 2014.

The up­date re­flects the rel­a­tive buoy­ancy of the US econ­omy which have also ev­i­dent in strong cor­po­rate earn­ings and UK in­vestors with hold­ings in US-fo­cused funds and com­pa­nies such as Fer­gu­son (FERG) who bring in most of their cash across the pond could ben­e­fit.

FUNDS

The Artemis US Select Acc Fund (BMMV510) which is aimed at cap­i­tal growth has al­ready gained 13% in three months. JP Mor­gan US Eq­uity In­come Fund (B3FJQ59) has re­turned 10.7% in three months. STOCKS

The afore­men­tioned Fer­gu­son is a build­ing ma­te­ri­als dis­tri­bu­tion com­pany which makes over 90% of its prof­its in the US hence it changed its name from Wolse­ley to the ti­tle of its US di­vi­sion last year.

This com­pany has been on the as­cent this year, the shares gain­ing 17.7% since March. For a cycli­cal com­pany like Fer­gu­son that needs a strong econ­omy to re­ally make money, the GDP data will be good news. When economies do well, or­ders go up and Fer­gu­son’s goods are re­quired.

On a slightly smaller scale, mar­ket­ing prod­ucts com­pany 4Im­print (FOUR) also makes the lion’s share of its money in the US and on 31 July it re­ported re­sults for the six months to 30 June which were ahead of ex­pec­ta­tions. A feat it has achieved con­sis­tently in re­cent years. It is also heav­ily tied to US growth.

CUR­RENCY

While the best GDP num­bers since 2014 should be seen as a pos­i­tive devel­op­ments, the forex mar­kets re­flected the high ex­pec­ta­tions ahead of the re­lease and the dol­lar ac­tu­ally dipped in the wake of the news. (DS)

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